PCA Expects Positive Fundamentals to Unleash Pent-Up Construction Demand in 2014

Cement consumption only expected to grow 4% in 2013 but forecast to jump nearly 10% in both 2014 and 2015

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A wet spring and early summer dampened cement consumption for the first quarter, probably holding 2013 consumption to modest 4 percent growth, but the Portland Cement Association expects strong construction-sector growth in 2014 and beyond.

According to the latest forecast, PCA anticipates double-digit growth in 2014 and 2015, with 9.7 percent consumption increases in both years.

“Nearly two-thirds of the anticipated growth in 2013 cement consumption will be caused by gains in the residential construction market,” Ed Sullivan, PCA chief economist said. “Home inventories are declining, signaling that it is time to start building, while the lingering effects of damaged credit due to foreclosure activity have created a robust apartment demand."

As recessions forestall demand for consumer products like cars, they also create pent-up demand for construction. The economy is positioned for stronger growth, but needs a trigger to unleash the potential. The trigger lies with a willingness to spend. PCA expects consumer and business attitudes to refocus on positive economic fundamentals rather than political uncertainty.

“Sentiment and confidence indices are extremely volatile. Business sentiment now stands at pre-recession levels,” Sullivan said. “Assuming Congress has learned its lesson from the fiscal cliff and will take a more rational approach with the upcoming debt limit discussions, political uncertainty and its adverse impact on the economy is expected to dissipate.”

Sullivan predicts an increase in local spending on public construction beginning in fiscal 2016. This is key to cement consumption recovery as road construction accounts for the largest area of public cement consumption. An 11 percent consumption gain is forecasted for 2016.

PCA Cement-Consumption Outlook, September 2013